01—Abstract
Summary
Summary of the 10-Q filed July 30, 2024. Cited figures are marked; the original filing is the authoritative source.
Xylem Inc. reported second-quarter 2024 revenue of $2,169 milliona, up 26.0% from $1,722 million in the prior-year quarter.
Organic revenue grew 9.2%, and acquisitions and divestitures, net, contributed $302 millionb. Net income rose to $194 million, or $0.80 per diluted share, from $92 million, or $0.45. Operating income was $253 million, up 112.6%, and adjusted earnings per share were $1.09, up 11.2%.
Orders were $2,087 millionc, up 12.4% overall but down 1.2% on an organic basis. Gross margin was flat at 37.8%. For the six months ended June 30, 2024, revenue was $4,202 million, up 32.6%, and net income was $347 million.
Operating cash flow improved to $377 milliond from $9 million, and free cash flow was $230 million. Cash and cash equivalents were $815 million at June 30, 2024, and total debt was $1,998 million, down from $2,284 million at year-end 2023, after the company settled its €250 million ($268 million) term loan with cash on hand in April 2024. Total backlog was $5,156 million, down 2.2% from June 30, 2023.
Xylem updated its 2024 outlook to total revenue growth of 16% and organic revenue growth of 5% to 6%. The company expects $40 million to $50 million in restructuring costs for the full year. The filing also discloses a Swedish tax dispute involving an assessment of SEK837 million (approximately $79 million).
A Swedish appellate court ruled in Xylem's favor on May 15, 2024, but the Swedish Tax Agency has appealed to the Supreme Administrative Court. Separately, Evoqua entered a non-prosecution agreement with the U.S. Attorney's Office and paid an $8.5 million criminal monetary penalty.
02—Key points
Key Highlights
- Q2 2024 revenue of $2,169 million, up 26.0%, with organic growth of 9.2% and $302 million from acquisitions and divestitures, net
- Q2 2024 net income of $194 million ($0.80 diluted EPS) versus $92 million ($0.45) a year earlier; operating income of $253 million, up 112.6%
- Adjusted EPS of $1.09 for Q2 2024, up 11.2%; adjusted EBITDA of $452 million, a 20.8% margin
- Q2 2024 orders of $2,087 million, up 12.4%, but down 1.2% on an organic basis; backlog of $5,156 million, down 2.2% year over year
- Six-month operating cash flow of $377 million and free cash flow of $230 million, compared with $9 million and negative $61 million a year earlier
- Cash of $815 million and total debt of $1,998 million at June 30, 2024; the €250 million term loan was settled in April 2024
- 2024 outlook updated to total revenue growth of 16% and organic revenue growth of 5% to 6%
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2024, Xylem kept $0.09.
- Revenue$2.17B100.0%
- Cost of revenue−$1.35B62.2%
- Gross profit$819.0M37.8%
- Operating costs−$566.0M26.1%
- Operating income$253.0M11.7%
- Interest, other & tax−$59.0M2.7%
- Net income$194.0M8.9%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed July 30, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $2.17B$1.72B | +26.0% |
| Cost of Revenue | $1.35B$1.07B | +26.1% |
| Gross Profit | $819.00M$651.00M | +25.8% |
| R&D Expenses | $58.00M$58.00M | 0.0% |
| SG&A Expenses | $485.00M$446.00M | +8.7% |
| Operating Income | $253.00M$119.00M | +112.6% |
| Interest Expense | $11.00M$12.00M | −8.3% |
| Net Income | $194.00M$92.00M | +110.9% |
| EPS (Basic) | $0.80$0.45 | +77.8% |
| EPS (Diluted) | $0.80$0.45 | +77.8% |
| Shares Outstanding (Basic) | 242.57M205.54M | +18.0% |
| Shares Outstanding (Diluted) | 243.54M206.74M | +17.8% |
05—Questions
Frequently Asked Questions
How did Xylem perform in the second quarter of 2024?
Revenue rose 26.0% to $2,169 million, and net income increased to $194 million from $92 million. Diluted EPS was $0.80, compared with $0.45 a year earlier. Operating income was $253 million, up 112.6%, and gross margin held at 37.8%. Organic growth was 9.2%, and acquisitions and divestitures, net, added $302 million.
Is demand for Xylem's products growing?
Orders were $2,087 million in the quarter, up 12.4% overall. On an organic basis, orders declined 1.2%. Total backlog was $5,156 million at June 30, 2024, down 2.2% from a year earlier, and the company attributed the decline to backlog execution in the Measurement and Control Solutions segment. Management expects about 40% of the backlog to be recognized as revenue in the remainder of 2024.
What is Xylem's updated 2024 outlook?
Xylem updated its outlook to total revenue growth of 16% and organic revenue growth of 5% to 6% for 2024. It expects $40 million to $50 million in restructuring costs for the full year.
What legal and tax matters are disclosed?
A Swedish subsidiary faces a tax assessment for 2013 of SEK837 million (approximately $79 million), including penalties and interest. An appellate court ruled in Xylem's favor on May 15, 2024, but the Swedish Tax Agency has appealed to the Supreme Administrative Court. Xylem believes it is more likely than not to prevail and records no unrecognized tax benefit for this position. Separately, Evoqua paid an $8.5 million criminal monetary penalty under a non-prosecution agreement that does not include a compliance monitorship.
06—Continue